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Free Monthly Budget Templates and Worksheets (Excel)

Monthly Budget Template

Every month is different, and it’s hard to plan when you have limited income. With a monthly budget template, however, you can visualize your budget and stop stressing out about whether you’ll be able to pay the bills and still have money left over. A budget summarizes the income and expenses expected within a given period or month in this particular case.

Making a monthly budget is an excellent way of ensuring essential bills such as rent, utilities, food, and mortgage are paid, and you have savings for emergencies. Using a simple monthly budget template helps you keep track of these finances and make better financial decisions that ensure you are well-positioned financially. This article will discuss creating a monthly budget template specific to you to see how much of your income is going toward what expenses.

What is a Monthly Budget?

A monthly budget is a plan that shows how much will be spent each month on some of the critical items necessary to maintain a household and some additional expenses. A budget can be detailed or very simple, depending on the recipient. The most basic budget includes only income and expense categories, including rent, food, and utilities, with very little detail. Additional detail could include interest accrued on investment accounts, insurance premiums paid in the previous month, gym memberships, and savings goals for the year.

The primary purpose of the budget is to show you how much money you are bringing in, how much is available and how you spend it. Getting this information helps put your finances into perspective. It allows you to make adjustments that help you save money for more considerable expenses down the road, such as college tuition or retirement savings.

Importance of it

As much as creating a monthly budget seems exhausting, it is worthwhile due to its benefits to the user. Most people have a hard time keeping track of their finances, sometimes because of the habits, they have developed in their life and sometimes because of their limited resources. A monthly budget can help you analyze your financial situation and plan elaborate spending strategies, such as reducing your cost per dollar by shopping sales or eating out less. Below are various reasons why using a monthly budget template is essential: 

Simple and Easy Way to Manage Debts

Debt such as credit card debt is a significant burden among people. Using a simple monthly budget template helps you put your debt situation into perspective and strategize how to eliminate the debts effectively.

Helps achieve goals: Everyone has specific financial goals in terms of savings and investments that they want to achieve. A monthly budget is a proven way of setting these goals and a clear financial path towards achieving the goals. In addition, you can determine where to reduce spending through the monthly budget template by adding and removing income and expense categories, thus adjusting the budget as needed to raise money for your goals.

It can prepare you for hard times: As much as most of us are focused on meeting our needs and wants, we forget to plan for hard times. A monthly budget can help you prepare for some unexpected expenses by creating a buffer or savings in your account. In addition, you can develop a long-term strategy for handling unforeseen expenses, such as car breakdowns and medical emergencies.

Encourages you: A monthly budget template is a huge morale booster toward achieving financial freedom and independence. This is because you can track and visualize progress made with your finances, for example, clearing debts and saving up. This encourages you to continue with positive spending habits.

Steps to make a monthly budget

Your monthly budget should align with your financial needs. Therefore, it is imperative to develop a budget that reflects your financial position, ensures all essential bills are covered, and does not exceed your income. Below is a thorough step-by-step guide on preparing a solid monthly budget for your personal use:

Gather financial papers

The first thing you should do is gather your financial papers. These include bank statements, gas bills, paycheck stubs, receipts for recent purchases, credit card statements, utility bills, 1099s, and any other documents that show your income and expenses for the previous month. Then, you can go back for three months to establish your consistent income and expenses.

Determine your income

Once all the paperwork is ready, it’s time to determine your income. When it comes to personal budgeting, you should always consider your take-home income. There are different ways to go about this, depending on your source of income. The money you receive after taxes and other deductions will suffice if employed. If you are self-employed, add up income from all your sources. For people with a variable income, such as freelancers, it would be best to use the minor monthly income generated in the last year. Try to estimate the income you obtain per month regardless of the source, whether it is alimony, pension, child support, disability check, social security, etc.  

Create a list of monthly expenses

Once you have determined your income, the next step is to create a list of monthly expenses. These expenses include housing rent or mortgage payments, car loan loans, utilities, medical bills, taxes, savings, and other recurring contributions. Other lifestyle expenses include spending money on clothing, entertainment, and food. Lastly, any unexpected costs such as emergencies that could be incurred should also be included in your list of expenses. This information can be obtained from your bank or credit card statements. Categorize these expenses into simple groups for easier understanding.

Think about your priorities

An excellent monthly budget template allows you to align your financial needs with your spending habits, thus being stress-free and saving money. However, it would be best if you learned to prioritize your needs based on what is more important to you. Therefore, it is essential to know your needs and wants so that they can be allocated accordingly. It is advisable to prioritize your needs, things like food, rent, and utilities, that you can’t avoid. However, not that a budget is not set in stone; it can be as flexible as possible as long as your financial objectives are being met. 

Identify fixed and variable expenses

Next, you should categorize your expenses as either fixed or variable. Fixed expenses cannot be reduced according to your income. These include rent, utilities, medical, and car insurance payments, while variable expenses are those that you can control, such as food, clothing, travel, dining, and entertainment. Variable expenses can be adjusted according to your take-home income. This stage can also be carried out by separating your wants from needs. Needs are expenses that cover basic needs such as food and rent. Wants are expenses on luxury such as entertainment and dining out.

Make total

Once you have determined your income and created a list of monthly expenses, it is time to create a budget for the month. The expenses should not exceed your income. It is recommended that expenses shouldn’t exceed 90% of your income. The total gives you an idea about your financial status and where you are headed in the future.

Evaluate and make adjustments (If needed)

Evaluate your budget and make any necessary adjustments. After this step, you start to use your monthly budget template for the next month. You can allocate it to savings and debt payments if you have more income. Conversely, if expenses exceed the expected income, then try to reduce spending or get a temporary part-time job until the situation returns to normal. It might be worth it to reconsider some of your variable expenses in such a situation. Finally, always ensure the income and expenses columns on the monthly budget template are balanced – equal figures – to ensure that all money has been accounted for.

Reviewing and tracking of monthly budget

Always review your monthly budget periodically or after several months. This way, you can identify areas that need tweaking. Remember, a monthly budget template is meant to satisfy your financial needs and priorities, which are bound to vary over time. Reviewing and tweaking your monthly budget ensures that the budget is still aligned with your needs at any particular moment. Changes can come about due to relocation, career change, etc. Depending on the type of change, the expenses can increase or decrease – for example, an increase in travel distance due to relocation can increase fuel expenses. 

Monthly Budget Templates

Templates are valuable tools when it comes to creating monthly budgets. The monthly budget templates offer an easy and less time-consuming way to track income and expenses for the month. You can obtain such simple word and excel monthly budget templates from this site. These simple documents are a great starting point when you start your budgeting journey! Download these free printable monthly budget templates and customize them to suit your financial needs.

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Monthly budget app

Monthly budget Google Sheets

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    50/30/20 Rule

    The 50/30/20 rule is a personal budgeting technique to help you budget your money. This method is considered one of the best and most practical personal budgeting techniques. It focuses on being realistic about your income and spending habits; therefore, it can help you save more money every month. The 50/30/20 rule states that the first 50% of your net income should be used solely for necessities (needs) such as rent, bills, and food, with the remaining 30% should be used for discretionary spendings such as travel and entertainment.

    Lastly, the last 20% should be savings and debt repayments. However, low-income and high-debt households can direct more money to necessities/needs to ensure they meet basic needs instead of luxury/wants and savings. This can be done temporarily until the financial situation is turned around.

    Some Words of Wisdom

    You can consider several things to improve the efficiency of your monthly budget template and ensure it is serving you as intended.

    They include:

    • Review your budget every three months: There is a need to review your monthly budget template every three months. This is necessary to see how things are working and identify unnecessary expenses. This will help you to make timely interventions and avoid detrimental financial turmoil.
    • Know the difference between necessities and luxury: Always distinguish between necessities and luxury. Some expenses may feel inevitable, but you can do without them in reality. If you are not aware of the difference, prioritizing your spending won’t be easy. For example, the internet can be necessary if you work from home and online, whereas it might be a luxury in a household that is purely used for entertainment.   
    • Avoid unnecessary expenses: The trick to successful budgeting is to avoid unnecessary expenses. Stick to your monthly budget template, and you will be well on your way to financial stability. Any expense outside your budget that is not mandatory should be overlooked to avoid straining your finances and creating a ripple effect in the coming months.
    • Restrain yourself: Always practice restraint when it comes to spending, and you will reap the benefits of your monthly budget template. Any unplanned expense that will compromise your financial plan should be avoided even if you have extra funds. Restraint is one of the critical factors of financial success.
    • Use cash: Make a habit of using cash to pay for things. It is easier to remain in control using cash than swiping your credit card. You can even place cash in envelopes for each expense category to avoid mixing up money allocated for different purposes.
    • Manage your debt: Any money you owe to creditors should always be a high-priority consideration. The first step in managing your debt is to assess where you stand with your credit cards and loans. Once you have an objective assessment, strategize on how to clear these debts without defaulting or causing stress on your finances.
    • Try to solve cash flow issues: You can always try to match your cash flows to the bills’ due dates. For example, a monthly cash flow problem could be associated with the late payment of bills. If your finances are tight, find a way to pay those late bills, like getting an extra job.
    • Keep an eye on significant expenses: Always factor in significant expenses such as replacing appliances, renovations, etc., and account for them in your monthly budget template. This way, you can be sure there is enough money to meet these expenses whenever needed through saving without borrowing or denting your budget. 

    Frequently Asked Questions

    How can you account for financial goals in your budget?

    To accommodate financial goals in your budget, you need careful calculations and strategies directed towards achieving these goals. Saving is one of the most effective methods of meeting financial goals. First, you can determine the amount of money needed for the financial goal and the timeframe for accomplishing this goal. Then, divide the amount needed by the timeframe (months) before the due date. Finally, you can estimate how much money you should set aside every month for this goal.